12/18/2017 The crisis of globalisation - The Hindu

COMMENT

The crisis of globalisation

HIMACHAL
TARAJUG
CarloPARTY 
 Pizzati
  LATOTOTAL   
T  YTRAP
BJP0018,
DECEMBER 1 2017
37P01:02
JB IST
INC 0DECEMBER
UPDATED: 7 22 CN18,
I 2017 00:27 IST
IND 2 2 DNI
Even as leaders tap into discontent, there won’t be any promised return to the past
Others
3 sr1ehtO

T oday’s so-called crisis of globalisation is nothing more than a new variable of the old
battle between protectionism and free trade. On the one hand it is the tribalists while on the

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12/18/2017 The crisis of globalisation - The Hindu

other it is the globalists. On one side there are the anti-Amazon, pro-retailers, losers of a
global challenge, while on the other, there are the pro-Amazon, e-commerce winners.
Nothing more, really. The opening of trade walls has accelerated industrial evolution in such a
way that workers have had to learn to adapt to almost every generation. The difference, today,
is that the evolution didn’t happen within a lifetime, but a few times within that lifetime. This
is why the Indian farmer, who initially moved to the city to work in a call centre, had to
reinvent himself as an Uber driver and is now worried about driverless cars — all within one
lifetime.

Cause of discontent
Technological innovations are what accelerate the rhythm of change. The medium is the
message all over again. It is the transformation of technology that affects society, not
whatever that technology delivers (news, electricity, TV series). And this is why in the United
States and the United Kingdom and in some parts of Europe, so many 50-somethings,
unemployed, disgruntled voters who found it hard to reinvent themselves ended up voting for
someone who promised to bring back an impossible past — a greater America, a more British
Britain, whatever that may mean.
 
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Up until 20 to 30 years ago, you could reach your pension age before a
new radical evolution in the job market, which created its winners and
losers. Today, the challenge is that evolutionary shifts happen not just
once before reaching pensionable age, but often.
After
globalisation’s This is what causes globalisation’s discontent. Blue collar workers from
promise
the mid-West cannot move to Silicon Valley; it’s a totally different skill
set, and only few can manage it.

A sort of revenge
U.S. President Donald Trump’s and Brexit’s victories can be seen as a sort of “revenge of the
losers”. The victims of the system described above decided to vote for someone who promised
to protect them. Ludicrous. And, in fact, little has been done by Mr. Trump or British Prime
Minister Theresa May to help those workers. And little is being done. Their standards of living
have not improved. Or have certainly not returned to previous levels. Nor is there any policy in
motion indicating that the previous levels will return.
There won’t be any promised return to the past. Which doesn’t mean the economy will not
thrive. It just won’t bring back the same old jobs to the unskilled.

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12/18/2017 The crisis of globalisation - The Hindu

For example, the latest U.S. tax reform promises to lower corporate taxes, rehashing the
ancient myth job, the “trickle down” theory, will not impact the lower middle classes who
voted for Mr. Trump. At the dangerous cost of increasing the deficit and widening the hole, Mr.
Trump is lowering too high corporate taxes to bring them down to European levels.
It would seem to make sense even though the impact on total taxation will be marginal.
Lowering tax on capital may increase wages for those skilled workers whose productivity will
be positively affected by increased demand for capital intensive work, but while engineers
might see an increase in their wages, the unskilled won’t benefit directly from it.
 
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In other words, instead of fighting the ills of globalisation, Mr. Trump
has found a way to economically hit the coastal electorate who mocked
and railed against him — the Hillary Clinton voters. By lowering the
maximal for family deductions and real estate taxes, he has hit those
The dark side of
globalisation
middle to upper middle classes in the east and west coasts who hate him.
They are the ones who will not benefit from this reform. This is what
he’ll obtain with this tax reform. Brilliant from his point of view because
the reform dips into the pockets of people who never have and never will
vote for him.
How will this impact free trade globally? U.S. manufacturing is down to 11.7% of U.S. GDP
(2016), while farming agriculture is only 1% (2015). America produces services such as
Amazon, Google and Facebook; these are the richest corporations. Their expansion is thriving
globally. And so is the expansion of other multinational corporations.
Even though the discontent of globalisation is a leftover of the crisis of 2008, today we don’t
see that it will really impact globalisation seriously. At least, so far, we don’t see the results of
this desire to raise barriers. Globalisation is here to stay.
Carlo Pizzati is an author and professor of communication theory

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